17 October 2006

Validating legislation - why?

There is a great deal of speculation about why validating legislation is needed. We are yet to obtain a copy of the Treasury advice.
I think it's useful to examine what might be at risk if the spending remain unlawful or what the legislation might achieve:
1. It may mean the parties need not pay the funds back. However, some parties have committed to do so anyway.
2. It blows the Darnton v Clark litigation out of the water. However, legislating to override existing litigation breaches fundamental legal principles (see LAC guidelines, para 3.3.2 and LAC report, Recurring Issues, "Retrospective Legislation") and I hope (probably naively) that the legislation might expressly preserve the litigation.
3. It preserves the results of the election. However, this was never in doubt because the election results can't now be overturned on this basis (see LAWS179: Validating legislation election not vulnerable because of overspending).
4. It avoids an qualified audit certificate. But, so what? If there was unlawfulness, then why pretend there wasn't? I'm not aware of any other consequences which flow from a qualified audit certifcate (but would welcome clarification from others about whether there are any).
It seems that the only compelling reason is the legal fiction of legality. That is, folk are uncomfortable that potential illegality remains on the books. However, as I've pointed out elsewhere, (uncured) illegality abounds in our legal system and the sky hasn't fallen. The presumption of legal relativity (or alternative, relative theory of illegality) recognises that illegal government action is treated as being lawful unless and until that it is successfully challenged in court. I've previously summarised the principles as follows:

[T]he presumption of validity of administrative acts: as Professor Wade explains, "the court will treat an administrative act or order as invalid only if the right remedy is sought by the right person in the right proceedings".[13] This approach was endorsed by the House of Lords in F Hoffmann‑La Roche & Co AG v Secretary of State for Trade and Industry.[14] Lord Diplock explained it in these terms:[15]
Unless there is such challenge and, if there is, until it has been upheld by a judgment of the court, the validity of the statutory instrument and the legality of acts done pursuant to the law declared by it, are presumed.
This means an illegal decision is "still capable of legal consequences" and "[u]ntil the necessary proceedings are taken, it will remain effective for its ostensible purpose".[16] The approach has important consequences for the status of ultra vires decisions. Not only do ultra vires decisions remain effective if no one challenges them in court, but they may remain effective even if they are challenged:[17]
The truth of the matter is that the court will invalidate an order only if the right remedy is sought by the right person in the right proceedings and circumstances. The [decision] may be hypothetically a nullity, but the court may refuse to quash it … In any such case the "void" order remains effective and is, in reality, valid.
Of course, Professor Wade's theory of legal relativity is not universally accepted. New Zealand's Professor Taggart has propounded his "relative theory of invalidity"; that is, an ultra vires decision is conclusively valid (and not merely treated as such) until a court declares it invalid. The courts' actions are therefore "constitutive", not merely "declaratory", and retrospectively invalidate the decision, not merely recognising its lack of legal consequence.[18]
[A]t this point the critical proposition is their commonality: an administrative instrument, decision, or action has some form of validity in law unless and until it is challenged. That is, both theories move past the now historic, pre-Anisminic theory of absolute invalidity.[19] ... Where a citizen seeks to raise the invalidity of an administrative instrument, decision or action, it is not sufficient to merely argue its invalidity; he or she must obtain a ruling from an appropriate court about its invalidity (except, perhaps, in the cases of "flagrant" or "patent" invalidity).[20]
- - - - - -
[12] William Wade and Christopher Forsyth Administrative Law (8 ed, Oxford University Press, London, 2000) 281.
[13] F Hoffmann La Roche & Co AG v Secretary of State for Trade and Industry [1974] 2 All ER 1128 (HL). Wade argued there still may be a class of cases where the illegality was so "patent" or "flagrant" that an order quashing the decision may not be needed, Wade and Forsyth, above n 12, 309. See similar comments expressed by Cooke J in A J Burr Ltd v Blenheim Borough Council [1980] 2 NZLR 1 (CA).
[14] F Hoffmann La Roche & Co AG v Secretary of State for Trade and Industry, above n 13, 1153–1154 Lord Diplock
[15] Smith v East Elloe Rural District Council [1956] 1 All ER 855, 871 (HL) Lord Radcliffe.
[16] Wade and Forsyth, above n 12, 308.
[17] See Michael Taggart "Rival Theories of Invalidity in Administrative Law: Some Practical and Theoretical Consequences" in Michael Taggart Judicial Review of Administrative Action in the 1980s: Problems and Prospects (Oxford University Press, Auckland, 1986) 70 and a helpful discussion of the various theories in Philip A Joseph, Constitutional and Administrative Law in New Zealand (2 ed, Brooker's, Wellington, 2001) 769–776. See also Christopher Forsyth "'The Metaphysics of Nullity' – Invalidity, Conceptual Reasoning and the Rule of Law" in Christopher Forsyth and Ivan Hare (eds) The Golden Metwand and the Crooked Cord: Essays on Public Law in Honour of Sir William Wade QC (Oxford University Press, London, 1998).
[18] Before Anisminic Ltd v Foreign Compensation Commission [1969] 1 All ER 208 (HL), a distinction was drawn between decisions that were void and those that were voidable. The former applied to decisions that were ultra vires, while the latter applied to decisions quashed for error of law on the face of the record. However, that distinction was rejected in Anisminic and the new theory was adopted, which avoided the conclusion that every decision that was ultra vires was a nullity, void ab initio or a legal nothing.
[19] Above n 13.

Even though an independent officer of Parliament, the Auditor-General, has concluded that the spending is illegal, this does not automatic invalidate the spending in the eyes of the legal system. That formal legal consequence might result from the Darton v Clark litigation.
Of course, informally and for other purposes, we might still treat the spending as being unlawful - but that's politics and pragmatics, not legal necessity to do so.

They are paying because of public pressure – the legislation will make no difference to the public expectation that they repay.

2 Darnton v Clark

But the Minister has basically conceded the illegality point. I suspect the High Court will be relieved not to be embroiled in this matter where Parliament itself should really clean up its act and get itself some rules that its members and Parliamentary Service are capable of understanding.

3 Impact on election

Never thought this was a legal issue rather its a matter of political rhetoric.

4 Qualified Audits

I do think this is an issue – the corruption allegation has flown around the world. You would be surprised at the number of political decision makers overseas that are aware of the allegation and how surprised they are “corruption” has occurred in New Zealand.

5 Of legal fictions and timing

I think there is less concern for legal fiction and more concern about the potential liability springs from further testing of previous spending on publications and other MP activity now and into the future. And also turning one’s eye to potential criminal proceedings should the police or SFO take the issue up, given that approx 40% of the spend was done by one person on the authority of her Boss the PM.

Better a quick dirty resolution now for which one won’t take much of a political hit (assuming promises of repayment are kept) than to draw it out, compound the damage and still have to confront a legislative fix.

Is it actually certain that the legislation does kill off Darnton v Clark? Darnton's statement of claim specifically refers to breaches of the Public Finance Act, which are not protected in the amending legislation.

Course Outline

"From time to time ... lawyers and judges have tried to define what constitutes fairness. Like defining an elephant, it is not easy to do, although fairness in practice has the elephantine quality of being easy to recognise. As a result of these efforts a word in common usage has acquired the trappings of legalism: 'acting fairly' has become 'acting in accordance with the rules of natural justice', and on occasion has been dressed up with Latin tags. This phrase in my opinion serves no useful purpose and in recent years it has encouraged lawyers to try to put those who hold inquiries into legal straitjackets.... For the purposes of my judgment I intend to ask myself this simple question: did the [decision-maker] act fairly towards the plaintiff?"

This course examines the elephantine concept of fairness in the law, along with other contemporary legal issues.